You’re Suddenly Rich — So How Do You Handle Your Money Now?
Opinion: You’re Suddenly Rich — So How Do You Handle Your Money Now?
Published: Sept. 18, 2021 By Fritz Glasser and Meghan Railey
The job of managing, protecting and passing on your net worth can be daunting. When you suddenly come into a lot more money because of an inheritance or other windfall, the lifestyle changes and associated financial decisions can be overwhelming. The reality of having to manage, protect, and pass on your net worth can be daunting, leading to the natural question: “Where do I begin?”
Here are four tips to help you begin managing, protecting, and increasing your wealth more effectively:
1. Decide who is your one trusted advisor—then build a support team around that person. Oftentimes, crowdsourcing advice can be counterproductive, resulting in poor decision-making. You should take the time to identify your one trusted advisor and build a team of other professionals around him or her.
Frequently, the newly wealthy have previously been working with one professional, such as an accountant, financial advisor or insurance broker, and continue relying on that same professional as their primary source of advice.
But this is often the wrong approach. Depending on how someone became rich, that person may no longer be the right professional to navigate the complex decisions that are now at hand. For example, some accountants might be competent at filing tax returns and ensuring clients adhere to tax regulations, while others might excel at more proactive tax planning.
Therefore, first-generation stewards of substantial wealth need to determine the specialties of various accountants and other financial professionals, including what type of client they typically serve. If you match their core client profile, then they might be a good fit to help guide you through the complex decision tree associated with newfound wealth.
However, just because a professional claims to have done something before doesn’t mean they have actually done so in reality. Ask them: “How many tax returns have you filed for people in a similar situation to my own?” “How many times have you done this for other clients, and what were the outcomes?” Don’t be afraid to ask these questions as part of the due diligence process.
In addition, you need to ask yourself some questions. Be deliberate about the role you want your advisor to play. Do you want your trusted advisor to take the lead on all decision-making, or only certain matters? Where should you and your advisor’s respective time be focused?
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